RE55R06: Leisure Homes, Second Homes & Age Restricted Housing

Fastest growing segment of the current population is age 75+ and 4 out of 5 are women.

83% of Seniors are property owners and 63% own their home free and clear

2.4 million U.S. households 55 and over in age-restricted housing

36% of Massachusetts population is 45 or older

Senior Market

Pre-Retiree (Baby Boomers)

Ages 40 to 58

Approximately 79 million

More mobile and more demanding than other generations

Have greater earnings but lack savings

Will probably work past 65 because of lack of savings

May end up supporting both their children and their parents

Will want more than one "home" (vacation as well as residence)

Looking for the best rate and terms at all times.

7% want to live in age-restricted housing for people 55 and older

50% of boomers ages 50-59 plan to purchase new homes for retirement

The transplanted homeowners in their mid to late fifties have traded in burdensome chores like snow shoveling and lawn mowing for maintenance -free dwellings and time for sports, exercise and social activities.

The number of people 50-69 is expected to increase by 87% over the next 15 years.

Active Retiree (the 'Silent Generation')

Ages 59 to 79

Approximately 24 million and growing

Named the 'Silent Generation' because a U. S. President was never elected from this Generation

Investment Analysis/ Property Criteria: Things to consider when talking to clients about vacation, or second homes.

What is primary use, enjoyment, or investment, family use, reunions, rentals, other

Tax consequences

Short term rental laws

Short or long term ownership

Financing options

Exit strategy

1031 exchange option

Insurance availability and affordability

Location and amenities

Health care, assisted living, senior care

Price range

Proximity to water, resort area

Airport

Northeast considerations: Country Club memberships waiting time and costs

Taxes - Land Bank Tax - Dukes County Transfer Tax

Searching for and Locating Properties:

Repeat homebuyers, experienced in buying process

Special challenges, locations are unfamiliar, long distance from primary residence.

Communicate the benefits of an area with use of Convention and Visitors Bureau and Tourism materials as well as internet resources.

Search process similar to primary residence

Sometimes best served by referring to a professional in that geographic area

Government Regulations and Applicable Laws:

General legal areas to consider during a transaction of a vacation, or second home: contract law, general property law, agency law, real estate license law, Federal regulations, federal state, and local tax laws, zoning and land use, federal, state and local environmental regulations

MGL, Chapter 186 - Estates for Years and At Will - The provisions of this section shall not apply to any lease, rental, occupancy or tenancy of one hundred days or less in duration which lease or rental is for a vacation or recreational purpose.

105 CMR 460.00 Regulations for Lead Poisoning Prevention and Control, The owner of a dwelling unit, including but not limited to a private residence, condominium, hotel, motel, or bed and breakfast establishment that is leased, rented or occupied, for vacation or recreational purposes for a period of 31 days or less shall not be required to abate or contain any paint plaster or other accessible structural material containing dangerous levels of lead in compliance with 105 CMR 460.110 when a child under six years of age is an occupant upon meeting and maintaining certain conditions (SEE 460.100(D): Short Term Vacation or Recreational Rental Exemption from the Obligation to Abate and or/contain Paint, Plaster or Other Accessible Structural Material Containing Dangerous Levels of Lead.

Resort areas have a higher percentage of vacation homes and investment homes.

Amenities and services are essential to the "getaway" experience,

The ability to rent the property and to the sense of the second home being a good financial investment.

These services are dependent on the availability and retention of a labor force and workforce housing is a critical element in attracting and keeping a stable workforce.

Other issues such as escalating insurance costs add pressure to affordable living.

Workforce Challenges for Resorts:

Housing affordability problems in the United States have become more pervasive

Over 14 Million owner and renter households spend more than half their incomes on housing in 1999

Poor-quality housing is particularly widespread in rural areas

Restrictions on land development and exclusionary zoning practices are making it difficult for the market to produce housing that low-income people can afford

As the supply contracts, production flags, and household growth adds to demand, the mismatch between the supply of low cost rentals and the number of households who need them will likely grow.

The lack of quality work force housing will make a resort area a less desirable destination. By providing quality workforce housing, workers, who stay in the community, support local business and increase the tax base.

Local issues:

Insurance issues - getting difficult to get

National disaster insurance bill is a priority

Septic Upgrade - Title V - comprehensive waste water management plan

Future assessments or fees on residents and owners

Seller has to have an inspection done by certified inspector

Has to be upgraded if needed

99% of the time cost compliance is born by seller

$2,000 - $10,000 a typical cost for redo

Not a lot of land so prices are going up

Some towns allow cluster development

40B Regulation - builders use it to bypass local zoning to allow increased density with more affordable housing.

Redevelopment is a growing trend

Environmental considerations are an important factor in the purchasing decision of a vacation home

Environmental law liability issues be aware of actual as well as the potential liability.

Become familiar with common environmental issues in market area

Do not give "expert" advice of environmental issues

Being aware and looking for signs of pollution or contamination during inspections, showings, property previews and walk-throughs

Recommending environmental audit if there is a suspicion of possible pollution

Reinforcing the need for full disclosure from sellers when listing properties.

105 CMR 460.00 Regulations for Lead Poisoning Prevention and Control, 460.100(D): Short Term Vacation or Recreational Rental Exemption from the Obligation to Abate and or/contain Paint, Plaster or Other Accessible Structural Material Containing Dangerous Levels of Lead.